Prior User Rights in a First to File Patent System

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A change in patent law in the United States, to a "First-to-File" system, may require the addition of prior user rights to allow those using non-patented ideas to continue using the invention.

In many European nations, which employ a first-to-file patent system, prior user rights are given to those who develop an idea independently from that same idea patented by another person. Prior user rights allow non-patentees to continue using their inventions in the same manner as they had been before a patent on that same idea issued to someone else. If the United States transitions to a first-to-file regime, there may be a need to provide the prior user rights it permits in trade secret law and, to a limited extent, business method patents to the entirety of patent law.

Under the current regime, many small companies prefer to maintain inventions as trade secrets as opposed to filing for a patent. As long as the inventions can be maintained as secrets, they can be protected without the high upfront costs associated with patents. Unlike patent owners, however, trade secret holders cannot exclude independent inventions. Unless the subsequent independent inventor files for a patent, the prior user retains the right to continue using the invention and cannot prevent the subsequent independent inventor from using it. Thus, trade secret holders are especially vulnerable to a subsequent independent inventor who files for a patent. This vulnerability would be greatly enhanced in a first-to-file regime where the prior user would have no recourse if the subsequent independent inventor is the first to file for a patent. Hence, many countries that employ a first-to-file patent system provide for prior user rights to avoid the unfairness in excluding prior independent inventors from using the inventions in which they have invested for some time.

Although the America Invents Act seeks to implement a first-to-file patent system, legislators are much more cautious about providing prior user rights. Not later than one year after the proposed legislation is enacted, the Director is to report on the operation of prior user rights in selected countries, such as Japan, Canada, Australia, and the nations comprising the European Union. In addition to a comparison of the patent laws of the United States and those other countries, the report on prior user rights is to analyze the effect of prior user rights on innovation rates in those selected countries.

The report is also to include a study of the effects of prior user rights on small businesses, universities, and individual inventors. Of particular interest is the relationship between prior user rights and the ability of startup enterprises to attract venture capital. Furthermore, an analysis of the legal and constitutional issues in adopting an aspect of trade secret law in patent law is warranted. In sum, the issue to be resolved by the report is whether converting to a first-to-file regime creates a particular need for prior user rights.

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